Gold Extends Fall As Investors Book Profits Ahead Of US Inflation Data

Economic

Commodity

Summary:

Gold prices fell on Wednesday to a near two-week low, following their sharpest single-day drop in five years in the previous session, as investors booked profits ahead of key U.S. inflation data due this week.Spot gold was down 1.7% at $4,054.69 per ounce, as of 09:22 a.m. ET (1322 GMT), after rising to as much as $4,161.17 earlier in the session. U.S. gold futures for December delivery fell 0.9% to $4,072.10 per ounce.The U.S. dollar index (.DXY), rose 0.2% to a one-week high, making dollar-priced bullion more expensive.

Spot gold was down 1.7% at $4,054.69 per ounce, as of 09:22 a.m. ET (1322 GMT), after rising to as much as $4,161.17 earlier in the session. U.S. gold futures for December delivery fell 0.9% to $4,072.10 per ounce.The U.S. dollar index (.DXY), rose 0.2% to a one-week high, making dollar-priced bullion more expensive.

Gold prices have notched multiple record highs and gained 54% this year, bolstered by geopolitical tensions, economic uncertainty, expectations of U.S. rate cuts and strong inflows into ETFs. Prices fell 5.3% on Tuesday, after notching a record high of $4,381.21 in the preceding session.

"Given the aggressive move to the upside over the course of the last several weeks, it's not completely surprising to us to see a bit of profit taking ahead of the CPI report on Friday," said David Meger, director of metals trading at High Ridge Futures.

On the technical front, gold is supported by the 21-day moving average at $4,005.Friday's U.S. Consumer Price Index (CPI) report, delayed due to the ongoing U.S. government shutdown, is expected to show that core inflation held at 3.1% in September.

Investors have nearly fully priced in a 25-basis-point rate cut at the U.S. Federal Reserve's meeting next week.

Gold, a non-yielding asset, tends to benefit in low-interest rate environments.

Meanwhile, Russia said on Wednesday that it was still preparing for a potential summit between President Vladimir Putin and U.S. President Donald Trump.

Investors are also awaiting clarity on next week's potential meeting between Trump and Chinese President Xi Jinping.

"We maintain a bullish outlook for gold and silver into 2026, and following a much-needed correction/consolidation, traders will likely pause for thought before concluding the developments that drove the historic rallies this year has not gone away," said Ole Hansen, head of commodity strategy at Saxo Bank, in a note.

Among other metals, spot silver dropped 1% to $48.27 per ounce. It slipped 7.1% on Tuesday.

Platinum fell 0.1% to $1,549.85, and palladium was down 1.6% at $1,430.

Reporting by Noel John and Pablo Sinha in Bengaluru, additional reporting by Kavya Balaraman; Editing by Sahal Muhammed

Source: Kitco

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Adam

Economic

Central Bank

The European Central Bank has finished cutting interest rates as inflation holds around its 2% target and the economy marches steadily on, according to a growing majority of economists in a Reuters poll.

While inflation picked up slightly to 2.2% last month from 2.0% in August, accounts of the ECB's September 10-11 meeting stated its policy was "sufficiently robust" to manage any inflation shocks.

The central bank kept rates on hold last month and offered a modestly upbeat assessment of the bloc's economy.

NO CHANGE EXPECTED ON OCTOBER 30

The ECB, which cut the deposit rate by 200 basis points between June 2024 and June 2025, will keep it unchanged at 2.00% on October 30 for a third straight meeting, all 88 economists in the October 15-22 Reuters poll said.

Nearly 72%, 63 of 88, said the ECB would hold its deposit rate this year, while 57% - 45 of 79 - saw no change by the end of next year.

Last month, slightly less than half expected rates to be unchanged at end-2026. Rate futures are narrowly pricing a 25 basis point cut by end-2026.

"A lack of softening in recent (economic) activity and inflation data closes the window for an additional ECB 'insurance cut'. We are dropping what would have been the last cut from our forecast and now foresee the policy rate staying at 2.00% until the end of 2026," said Shaan Raithatha, senior economist at Vanguard.

That contrasts with expectations for two more rate cuts from the U.S. Federal Reserve this year, where a weakening labour market is taking precedence over rising inflation risks, partly stoked by tariffs, a separate Reuters survey showed.

The euro zone is handling U.S. trade barriers better than previously expected, leaving inflation risks "quite contained", ECB President Christine Lagarde said on September 30.

Inflation will average around 2% each year through 2027, poll medians showed, largely unchanged from last month.

STABLE GROWTH OUTLOOK

The growth outlook also remained stable amid hopes of fiscal spending, particularly from Germany - the bloc's biggest economy. The euro zone economy will expand 1.2%, 1.1% and 1.4% this year, next year and in 2027, respectively, the poll predicted.

But that stable outlook has downside risks. A majority of economists - 24 of 30 - who responded to a separate question said the euro zone economy was more likely to grow slower than they expect over the coming year than faster.

"Euro zone resilience is what is driving the steady outlook ... But the risk is still clearly to the downside both in terms of growth and inflation," said Carsten Brzeski, global head of macro at ING.

"Political instability is very likely to bring down French growth. In Germany, we're now seeing growth optimism is being hit and it could very well be it takes longer than expected before the stimulus story shows up."

Germany's economy is forecast to grow a mere 0.2% this year and 1.1% in 2026, largely unchanged from July's forecasts, despite optimism around infrastructure spending plans. Growth in France will be 0.6% this year and 0.9% in 2026, the poll predicted.

Source: reuters

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Adam

Economic

Is the US financial plumbing system under severe stress?

Last week, several pundits and financial media were all over the potential stress brewing in the US financial plumbing system.

Specifically, SOFR fixings have been several basis points above Fed Funds, which could indicate that repo markets are under stress as collateralized repo transactions (e.g,. SOFR) command an increasingly higher yield over pure proxies of risk-free rate (e.g., Fed Funds).

Before I give you my perspective, let’s recap: why would such pressure be building in the first place?

QT has operated in the background for a while, the RRP facility has been drained to virtually 0, and the TGA has been replenished: this trio of plumbing operations has led to bank reserves flirting with the 3 trillion level.

$3 trillion of reserves is an important level because it’s ~10% of US nominal GDP as per Q2. In a recent speech, Waller indicated 10% as the first threshold to define a regime of ‘’scarce reserves’’.

Reserves are money for banks – they are used to settle interbank transactions.

If reserves are scarce, banks will find it harder to oil the underlying mechanism supporting the base of the pyramid of financial markets: the US repo market.

The chart below shows how US bank reserves now represent 11% of US nominal GDP, close to the ’’Waller threshold’’.

Are US Bank Reserves Becoming Too Scarce?_1

But does that mean the financial plumbing system is under stress?

Not really.

One of the easiest ways to track plumbing stress is to look at the difference between 3-month ahead SOFR rates (proxy for US repo rate) and 3-month ahead Fed Funds rate (pure risk-free) - the SOFR/Fed Fund spread investors are expecting for the near future.

The spread sits at 8 bps today, hardly signaling any real underlying stress in the plumbing of financial markets.

And another barometer for US financial plumbing stress - swap spreads - is also behaving very well.

Powell also basically telegraphed the end of QT this week, so this is a risk the Fed is actively managing.

Source: investing

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Warren Takunda

Economic

Has UK inflation peaked? The latest official figures showing price growth in the UK stayed at 3.8% in September seem to suggest so.

The statement cannot be made with absolute certainty yet but many economists reacted to the latest consumer prices index (CPI) data with a message that the only direction for inflation over the rest of the year was down.

City economists had expected the Office for National Statistics to report an increase from August’s 3.8% to 4%, and they were in good company – the Bank of England also said inflation would top out at that level last month.

Food retailers had other ideas. They slowed the recent escalation in the cost of essential items, helping to ease the pressure on household budgets.

Signs of Peak Inflation Open Door to Earlier Bank of England Interest Rate Cuts_1

Having focused on food inflation in recent months, central bank policymakers will find themselves under pressure to bring forward interest rate cuts that investors believed were unlikely before next spring.

A major rethink could lead to a reduction in the cost of borrowing as early as the Bank’s monetary policy committee meetings in November or December.

However, the consultancy Capital Economics said it expected only a modest adjustment to the Bank’s timetable, bringing the decision forward from March to February.

Other economists said a more dramatic shift was possible after clear signs of the economy slowing before next month’s budget.

Martin Beck, at the consultancy WPI Strategy, said: “A November move looks off the table, but markets may be overestimating how long the Bank will wait.”

He expects CPI inflation to continue falling back towards the 2% target in the first half of next year as the effect of tax and regulated price increases earlier this year drop out of the annual calculation.

Adam Deasy, an economist at the accountancy firm PwC, said the Bank would “perhaps want clearer signs that this is indeed the peak before moving further on rate cuts”.

He added that while signs of CPI topping out were good news, it “still sits at nearly double the Bank of England’s 2% target, and the UK remains an outlier among major economies; the next highest in the G7 is the US at 2.9%”.

Several Bank policymakers have also pointed out that services inflation remains high. The recent figures proved the point, showing this major element of the inflation basket remaining stuck at 4.7%.

Food inflation might have slowed but groceries are still 4.5% more expensive on the year.

Rebecca Florisson, the principal analyst at the Work Foundation at Lancaster University, said the rising cost of essentials was “particularly bad news for low-income households”.

Using survey evidence from more than 3,600 people, she said a combination of wage stagnation and the cost of living crisis meant only 42% of low-paid workers said their pay was keeping up with costs – compared with 73% of higher-paid workers.

Rachel Reeves will want to alleviate this situation in the budget and is due to chair a meeting of cabinet colleagues on Thursday to ask what each department can do to tame inflation. Treasury officials are understood to be considering a cut in VAT on energy costs from 5% to zero.

If that happens, it could knock 0.2 percentage points off CPI. That must make the Bank think again about a rate cute in 2025.

Source: Theguardian

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Damon

Central Bank

Analysts at BofA Global Research expect the Bank of Canada (BoC) to maintain its key policy rate at 2.50% during the upcoming October 29 meeting, delaying rate cuts until December. Their view hinges on residual strength in Canada's labor market and persistently elevated core inflation, both of which are viewed as significant headwinds to immediate easing.

In their latest note, Carlos Capistran and colleagues emphasize, "We expect the BoC to keep its policy rate unchanged at 2.50% on October 29." The report points to sticky core inflation measures, averaging 3.15% in September, and a robust rebound in employment, noting a +60.4k net job gain last month, as justifications for the central bank holding policy steady.

Economic growth in Canada remains subdued, although July brought a modest reprieve with a 0.2% month-over-month GDP expansion. This was buoyed by gains in extractive and manufacturing industries; however, weak retail trade and tepid consumer spending continue to restrain momentum, casting doubt on the resilience of the recovery.

Headline inflation rose to 2.4% in September from 1.9% in August, with core measures edging up as well, driven primarily by fading disinflation in gasoline prices. "Rising inflation limits the BoC's room to cut the policy rate in October," the BofA team cautioned, adding that inflation persistence keeps the central bank in a cautious stance, despite broader weakness in economic activity.

The BoC is expected to maintain its meeting-by-meeting flexibility, but forward guidance will likely tilt dovish should inflation begin to ease. Capistran and his co-authors see the central bank delivering two 25bp cuts, one each in December and January, bringing the policy rate down to 2.00% by early next year.

In rate markets, the CAD curve is seen "pricing out cuts—but not enough," suggesting scope for front-end rates to decline further as policy easing resumes. Similarly, BofA's FX strategists argue the risk/reward now favors positioning for a lower USD/CAD, especially given low implied volatility and recent USD strength priced into the currency pair.

Market expectations for a surprise rate cut in October still remain elevated, with implied odds around 70%. However, BofA views this as overly aggressive, stating the market "reflects a BoC that is more in a hurry than it may need to be," signaling greater scope for disappointment if the central bank ultimately opts for patience.

Source: Investing

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Samantha Luan

Stocks

Forex

Economic

Last year, China's battery industry average utilization rate cratered to just a third of maximum capacity amid severe overcapacity following years of massive investment and expansion. This put smaller manufacturers under severe pressure and fueled further industry consolidation, while also forcing producers to increasingly seek overseas markets. Luckily, these efforts appear to be paying off: China Energy Storage Alliance has reported that Chinese battery storage forms secured ~200 overseas orders totalling 186 gigawatt-hours (GWh) in the first half of this year, good for a more than 220% year-over-year surge. Not surprisingly, just 5.34 GWh– less than 3% of the total--came from the United States amid hefty tariffs by the Trump administration compared to nearly 60% that came from the Middle East, Europe and Australia.

Back in April, the Trump administration imposed duties of up to 3,521% on solar imports from Vietnam, Cambodia, Malaysia and Thailand, with the finalized tariffs applying to shipments from China’s solar heavyweights, including JinkoSolar and Trina Solar. Further, Chinese firms are increasingly diversifying their production bases in a bid to mitigate growing tariff risks from Washington. Currently, Chinese solar manufacturers have installed ~80% of overseas capacity including solar wafers, solar cells and modules in Southeast Asia.

“The industry used to say that you either go overseas or exit the game,” said Gao Jifan, chairman of Trina Solar.

“Now, due to tariffs, simply exporting isn’t enough; you must also localise production abroad.”

China’s battery storage sector is also benefiting from a rebound by the local markets thanks to policy support by Beijing. China’s National Energy Administration recently unveiled a plan to mobilize 250 billion yuan (~$32 billion) in new investment to build 180 gigawatts of new energy storage capacity by 2027. Lately, Chinese companies that operate in the energy storage space have been posting robust growth as fundamentals continue to improve. During the first half of 2025, 47 of 55 listed companies in the Chinese energy storage sector were profitable. China’s Contemporary Amperex Technology Co., one of the largest li-ion battery manufacturers in the world, reported H1 2025 operating revenue of RMB178.886 billion ($25.15 billion), good for a 7.3% increase year over year while net profit attributable to shareholders clocked in at RMB30.485 billion, up 33.33%. In its interim report, CATL revealed that sustained rapid growth in demand for energy storage cells driven by the global clean energy transition has been driving its impressive performance.

That said, battery storage expansion is expected to be a global trend: energy research and consulting firm Wood Mackenzie has projected that global investment in battery storage will reach approximately $1.2 trillion by 2034. This investment will be needed to support the installation of over 5,900 GW of new wind and solar capacity during that period. The report emphasizes that advanced, grid-forming battery technology is crucial for maintaining grid stability as renewable energy sources become more prevalent.

U.S. Battery Storage Explodes

For years, battery systems have only played a marginal role in U.S. electricity networks, with power utilities focusing more on building out capacity from natural gas plants and renewable energy sources. According to energy data portal Cleanview, five years ago, the United States had 74 times more wind farm capacity and 30 times more solar capacity than battery capacity within its power generation system.

However, steady cost declines coupled with rising energy density levels have encouraged utilities to ramp up their battery installations, with battery storage output now exceeding other power sources in certain power markets. And, it’s boom time for the U.S. utility-scale battery storage market: currently, there are only around 5 times more solar and wind capacity in the country compared to battery capacity, thanks in large part to a 40% decline in battery prices since 2022. Currently, 19 states have installed 100 MW or more of utility-scale battery storage. According to Cleanview, there are just under 30,000 megawatts (MW) of utility battery capacity across the U.S., good for a massive 15-fold increase since 2020. For some context, the U.S. solar sector has added 84,200 MW over the timeframe, while the wind sector has increased its capacity by just 7,000 MW. Falling costs is the biggest reason for the surge in U.S. battery deployments: according to financial advisory and asset management firm Lazard the levelized cost of electricity (LCOE) for utility-scale solar farms paired with batteries ranges from $50-$131 per megawatt hour (MWh). This makes the pair competitive with new natural gas peaking plants (LCOE of $47 to $170 per MWh) and even new coal-fired plants with LCOE of $114 per MWh.

According to Lazard's 2025 LCOE+ report, new-build renewable energy power plants are the most competitive form of power generation on an unsubsidized basis (i.e., without tax subsidies). This is highly significant in the current era of unprecedented power demand growth in large part due to the AI boom and clean energy manufacturing. Renewables also stand out as the quickest-to-deploy generation resource, with the solar plus battery combination often boasting far shorter deployment times compared to constructing new natural gas power plants. California is, by far, the national leader in utility-scale battery storage, accounting for ~13,000 MW or about 42% of the national total. According to the California Energy Commission, the California Independent System Operator has installed ~21,000 MW of solar capacity and ~12,400 MW of battery capacity, allowing the state to rely heavily on batteries during peak demand periods.

Source: Zero Hedge

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Adam

Commodity

Silver’s rising, who are its top producers and AI is writing faster than humans!

Are We Still in the Early Stages of a Major Cycle Where Silver Outperforms US Equities?

Silver has broken through the key $50 resistance level and continues to set new all-time highs. The chart below, plotting silver relative to S&P 500, suggests we may only be in the early phase of a broader capital rotation into hard assets.

Could Silver Lead the Next Major Market Cycle?_1

The World’s Largest Silver Producers

Mexico remains the world’s top silver producer in 2024, followed by China and Peru.

Could Silver Lead the Next Major Market Cycle?_2

Signs of Irrational Exuberance on US Stocks?

Despite lingering caution, investor positioning in US equities has reached euphoric levels, showing a widespread disregard for risk. The top 10 US mega-cap stocks now trade at 270% higher EV-to-GDP multiples than the 10 largest tech and telecom firms at the 2000 bubble peak. Similarly, the Buffett Indicator (total market cap-to-GDP) far exceeds dot-com era levels.

Could Silver Lead the Next Major Market Cycle?_3

Magnificent Seven Earnings Growth Is Expected to Slow Down Meaningfully Going Forward

Analysts now expect earnings for the Magnificent 7 to grow by just +14% y/y in 3Q, half the pace of the prior quarter and well below the ~30% average of the past year. The silver lining, however, is that lower forecasts are easier to beat, as seen in previous quarters.

Could Silver Lead the Next Major Market Cycle?_4

One of the Biggest Threats to the Entire AI boom Is Power

Morgan Stanley projects US data centre demand to reach ~57 GW by 2028, yet only 18–21 GW of capacity exists or is under construction, leaving a 36 GW shortfall. Without massive energy investment, the AI revolution may soon hit a hard ceiling.

Could Silver Lead the Next Major Market Cycle?_5

How Fast is European Sovereign Debt Growing?

Germany’s public debt has reached a new record high. Since 2000, its debt growth has matched Italy’s pace, even if Italy’s total debt level remains far higher. Relative to France or Spain, however, Germany’s position still appears comparatively stable.

Could Silver Lead the Next Major Market Cycle?_6

AI Now Writes More Articles Than Humans

Oxford researchers estimate that AI-generated articles now outnumber human-written ones, rising from ~5% in 2020 to 52% by May 2025, and projected to exceed 90% next year. The main driver is cost. AI content costs under $0.01 per piece, versus $10–100 for humans. The growing risk, however, is that as AI increasingly trains on its own output, originality erodes and idea diversity fades.